ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A price floor is the lowest legal price that can be paid in a market for goods and services, labor, or financial capital.

Detailed explanation-2: -A price floor is a government-or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. A price floor must be higher than the equilibrium price in order to be effective. A minimum price is when the government don’t allow prices to go below a certain level.

Detailed explanation-3: -An effective (or binding) price floor is one that is set above equilibrium price. An effective (or binding) price ceiling is one that is set below equilibrium price. Effective price ceilings and floors create dead-weight loss. An effective price floor creates a surplus and benefits suppliers.

Detailed explanation-4: -Price ceiling refers to the mechanism by which the price for a good is prevented from rising to a certain level. In contrast to that, price floor is the mechanism by which the price of a good is prevented from falling below a certain level.

Detailed explanation-5: -It means equilibrium. Price floor implies legislated or government fixed minimum price that should be charged by the seller. The minimum price is fixed above the equilibrium price.